A referral back in 2019 from a UK court to the Court of Justice of the European Union (CJEU) sought to clarify if disclosure of a design outside the EU may impact the protection conferred to the design in the EU under UCDRs. The answer to this question would have important implications for design protection in the UK and EU. However, the UK court has since withdrawn this referral. Nevertheless, now that the UK and EU are set to part ways after Brexit, it is clearer than ever that designers will need to pay extra attention as to where (and when) they choose to disclose their creations to ensure valid protection is in place. Interestingly, this case may be interpreted as yet another episode in the never-ending struggle between the Heraclitan and Parmenidean philosophical viewpoints.
Who
The Beverly Hills Teddy Bear Company (“Teddy”, the claimants) is a Californian company that markets animal lookalike soft toys under the name 'Squeezamals'. Teddy protected designs related to these toys by means of registered and unregistered community design rights (UCDRs), and copyright in the design drawings.
PMS International Group PLC, (“PMS”, the defendant) is a leading UK importer and wholesale distributor of a wide range of consumer products, including toys.
What
In this action, Teddy was seeking summary judgement for the infringement of its UCDRs in relation to six Squeezamals (a dog, a monkey, a panda, a penguin, a unicorn and a cat). The case concerned only UCDRs. PMS was seeking to strike out part of the claim by Teddy. Both sides agreed that five of the six toys (all but the unicorn) were first shown to the public in October 2017 at a trade fair in Hong Kong. The toys were subsequently exhibited for the first time in the EU at the Nuremberg Toy Fair in Germany in January 2018. In July 2019 the Intellectual Property Enterprise Court (IPEC) heard this case where, unusually, no facts were in dispute. The issue, therefore, was solely in respect of a point of European Union design law. Below, we copy the relevant provisions of the European Design Regulation:
Article 1
Community design
1. A design which complies with the conditions contained in this Regulation is hereinafter referred to as a 'Community design'.
2. A design shall be protected:
(a) by an 'unregistered Community design', if made available to the public in the manner provided for in this Regulation;
(b) by a 'registered Community design', if registered in the manner provided for in this Regulation
Article 4
Requirements for protection
1. A design shall be protected by a Community design to the extent that it is new and has individual character.
…
Article 5
Novelty
1. A design shall be considered to be new if no identical design has been made available to the public:
(a) in the case of an unregistered Community design, before the date on which the design for which protection is claimed has first been made available to the public;
(b) in the case of a registered Community design, before the date of filing of the application for registration of the design for which protection is claimed, or, if priority is claimed, the date of priority.
…
Article 7
Disclosure
1. For the purpose of applying Articles 5 and 6, a design shall be deemed to have been made available to the public if it has been published following registration or otherwise, or exhibited, used in trade or otherwise disclosed, before the date referred to in Articles 5(1)(a) and 6(1)(a) or in Articles 5(1)(b) and 6(1)(b), as the case may be, except where these events could not reasonably have become known in the normal course of business to the circles specialised in the sector concerned, operating within the Community. The design shall not, however, be deemed to have been made available to the public for the sole reason that it has been disclosed to a third person under explicit or implicit conditions of confidentiality.
…
Article 11
Commencement and term of protection of the unregistered Community design
1. A design which meets the requirements under Section 1 shall be protected by an unregistered Community design for a period of three years as from the date on which the design was first made available to the public within the Community.
2. For the purpose of paragraph 1, a design shall be deemed to have been made available to the public within the Community if it has been published, exhibited, used in trade or otherwise disclosed in such a way that, in the normal course of business, these events could reasonably have become known to the circles specialised in the sector concerned, operating within the Community. The design shall not, however, be deemed to have been made available to the public for the sole reason that it has been disclosed to a third person under explicit or implicit conditions of confidentiality.
…
Why
Teddy argued how disclosure outside the EU could become known to circles specialised in the sector in question for the purposes of Articles 5 and 7, but not for the purposes of Article 11. In short, how could the disclosure in Hong Kong destroy the novelty of the UCDRs in question, but at the same time not provide them with the protection they sought in the EU?
PMS argued that the relevant date for assessing the novelty of UCDRs was the date on which the UCDRs came into being, as required by Article 11. PMS contended that in this case this would mean that all five UCDRs in issue first existed as a result of the disclosure at the German toy fair, but all five did not possess novelty because of the Hong Kong fair in October the previous year. Therefore, none of those five Squeezamals was protected (and no IP rights could accordingly be infringed).
Although the UK court’s judge, HHJ Hacon, stated his own view that first disclosure must occur within the EU for a new UCDR to arise, he did not consider the case settled under EU law and referred questions to the CJEU:
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For the protection of an unregistered Community design to come into being under ['the Regulation'], by the design being made available to the public within the meaning of art.11(1), must an event of disclosure, within the meaning of art.11(2), take place within the geographical confines of the Community, or is it sufficient that the event, wherever it took place, was such that, in the normal course of business, the event could reasonably have become known to the circles specialised in the sector concerned, operating within the Community (assuming the design was not disclosed in confidence within the terms of the final sentence of art.11(2))?
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Is the date for assessing the novelty of a design for which unregistered Community design protection is claimed, within the meaning of art.5(1)(a) of the Regulation, the date on which the unregistered Community design protection for the design came into being according to art.11 of the Regulation, or alternatively the date on which the relevant event of disclosure of the design, within the meaning of art.7(1) of the Regulation, could reasonably have become known in the normal course of business to the circles specialised in the sector concerned, operating within the Community (assuming that the design was not disclosed in confidence within the terms of the final sentence of art.7(1)), or alternatively some other, and if so, which date?
Analysis
Heraclitan Empiricism
In Case ZR 126/06 Gebäckpresse II, the Bundesgerichtshof (the German Federal Supreme Court) ruled that in order for a design to be afforded UCDR protection, the event giving rise to the first disclosure of the design – such as the marketing of a product made according to the design – must first take place within the territory of the EU. If before that date there has been an event outside the EU giving rise to the design being disclosed, in circumstances such that the event could reasonably have become known in the normal course of business to the relevant circles in the Community, the design for which protection is sought will lack novelty.
However, this presents a significant paradox for designers who first disclose their design outside of the EU. Under Articles 5 and 7 of the European Design Regulation, a design will only qualify for protection if no identical design has been made available to the public “…except where these events could not reasonably have become known in the normal course of business to the circles specialised in the sector concerned, operating within the Community”. Accordingly, designers would be disqualified from obtaining valid UCDR protection by creating conflicting disclosures outside the EU, which would nevertheless be known in the normal course of business to the circles specialised in the sector concerned. Could these very disclosures instead have given rise to valid UCDRs?
The above paradox would have certainly been of interest to Heraclitus, the notorious pre-Socratic Greek philosopher known for the paradoxical nature of his philosophy and fondness for word play.
Heraclitus believed in an ever-changing reality (“Panta Rhei”), which could however be explained by the exercise of the logic, in which only apparently contrasting opposites could find balance and harmony. Does the position of the Bundesgerichtshof, in fact, already represent this universal equilibrium?
Parmenidean Absolutism
This is a position that some academics have struggled to agree with. Some experts believe that, in the same way that disclosure outside the EU could make the designs known (to the relevant circles specialized in the sector concerned, in the normal course of business) in the EU for the purposes of Article 7(1), then the substantially similar wording of Article 11(2) should also give rise to corresponding UCDRs by any exhibition outside the EU. In other words, assuming that the relevant circles in the EU could have reasonably become aware of the disclosed design (a low threshold in the times of internet and social media), then such disclosure should also trigger UCDR protection.
This rather ‘holistic’ view appears in line with the view that another illustrious pre-Socratic Greek philosopher – Parmenides – would have probably had on this topic. Parmenides believed that truth and appearance are but two aspects of the same being. In fact, according to Parmenides, “whatever is is, and what is not cannot be”. If disclosure is what is needed for UCDR to arise, then disclosure cannot be what kills it at the same time!
Conclusion
The Brexit dimension to these questions could be of particular importance for designers, since post-Brexit the UK will no longer be part of the EU. Designers of any nationality will need to carefully consider whether to disclose their new creations in a post-Brexit EU first before proceeding with their design rollout. From a practical point of view, designers may take the practical approach of arranging for simultaneously disclosing their designs in their home country (for example in the UK for UK designers) and in the EU, to still be able to avail of the argument that the designs were released in the EU first, if the Bundesgerichtshof is right. I wonder how Parmenides would react!
Dr Marco Morbidini